Airports National Policy Statement Contents

Annex I: Carbon

The UK’s obligations on greenhouse gas emissions are set under the 2008 Climate Change Act. Under this framework, the UK has a 2050 target to reduce its greenhouse gas emissions by at least 80% on 1990 levels and has a series of five-year carbon budgets on the way to 2050. The Committee on Climate Change (CCC) in legislating for the Fifth Carbon Budget796 have set a limit that UK gross aviation emissions797 will be no more than 2005 levels—37.5 MtCO2—in 2050.

Figure 54: Existing carbon budgets assume an emissions pathway that allows for emissions from international aviation and shipping798

The carbon reduction targets set for other sectors, such as energy or industry, reflect the technical challenges of developing non-fossil fuel alternatives for aviation fuel.799 The economy-wide target of reducing emissions by 80% below 1990 levels could be achieved through other sectors reducing their emissions by around 85% on average.800 Lord Deben described this as “very generous elbow room” of the aviation sector and that is the maximum that could be allowed without compromising other sectors.801 The Government states in the draft NPS that Heathrow expansion can be delivered within “the UK’s climate change obligations” by implementing “a mix of policy measures and technologies”.802

Work of the Airports Commission

To reflect the uncertainty over future aviation carbon policy, the Airports Commission modelled demand for aviation against two carbon policy scenarios:

i)The first was a carbon-capped scenario, which assumed no international action to limit aviation emissions and only UK policy action to limit emissions to the CCC’s planning assumption; and

ii)The second carbon policy was a carbon-traded scenario, which assumed the operation of the European Emissions Trading System in respect of aviation until 2030. After that it assumed a “complete liberalised global market” for carbon emissions, which would allow aviation to “buy in” credits from other sectors of the economy.803

Aviation demand was lower under the carbon capped scenario (435 mmpa vs 369 mmpa in 2050 for a NWR).804 This is because the costs of carbon abatement were higher than the second scenario to bring emissions within the CCC’s carbon limit (the carbon price is £634 per tonne, compared with £196 per tonne). The Commission forecast runway expansion to result in increased carbon emissions, predominantly from additional international flights, rather than runway construction and operation. The Gatwick Second Runway is associated with the lowest additional emissions. At the national level, the Commission’s forecasts showed that CO2 emissions from aviation exceed the CCC’s carbon limit without expansion (at 39.9Mt) and are higher with a new runway (43.3Mt). Despite this, the Airports Commission concluded that any one of the three shortlisted schemes could be delivered within the UK’s climate change obligations,805 as well as showing that a mix of policy measures and technologies806 could be employed to meet the CCC’s targets.

Latest carbon forecasts

The forecasts for demand and carbon emissions have been updated by the DfT. The main difference between these forecasts and those of the Commission is that the demand for aviation will be the same no matter the carbon policy scenario. Previously, the carbon capped scenario resulted in a higher carbon price being applied to limit the growth in demand. However, the DfT have assumed that more of the carbon reductions can be met through “supply side abatement policies” without having to use a higher carbon price to reduce demand.807 In terms of the carbon forecasts, with expansion and at the individual airport level, the Gatwick scheme still has the lowest additional emissions (see table below).808

Table 15: Change carbon emissions over the appraisal period for each scheme under central demand forecast809

Over the life of the schemes, the NWR scheme is forecast to contribute significantly more to UK emissions (figure below). The Appraisal of Sustainability concluded “overall the Gatwick scheme is judged to perform best on the objective of minimising carbon emissions in airport runway construction and operation.”810

Figure 55: Additional emissions, at the UK level, by expansion option, MtCO2811

The latest carbon forecasts, updating those produced four years ago by the Airports Commission, show:

Figure 56: Carbon emissions from UK departing flights (MtCO2, DfT17 central forecast and Airports Commission assessment of need, carbon traded forecast)813

These improvements rely on new assumptions that enable carbon emissions from air traffic movements to decline at a greater rate than was previously thought, including:

Carbon mitigations assumed by the Department

It is unclear at this stage whether the set of policy measures to achieve compliance with the CCC carbon limits can deliver to the extent assumed by the DfT. If these assumptions are over-optimistic, there may be implications for the business cases of the various schemes. This is because demand would have to be reduced to comply with carbon budgets if planned policy measures are ineffective. This was identified by Lord Deben when he wrote to the Secretary of State for Business, Energy and Industrial Strategy expressing concern that the business case for Heathrow expansion did not reflect the CCC’s carbon limits.814

Carbon trading

The Airports Commission and DfT considered that UK aviation emissions could continue to grow unconstrained, with compensatory reductions being made elsewhere via a carbon trading mechanism. Specifically, it was assumed that the CO2 emissions from flights departing UK airports are traded at the European level until 2030 and then as part of a global carbon market.

They identified the EU ETS in 2012,815 and the forthcoming Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) agreed at the International Civil Aviation Organisation (ICAO)816 as the means to do this. The AEF questioned how plausible this was:

While there is a high-level agreement to implement CORSIA, much of the detail that will determine its environmental integrity is still being debated and cannot be taken as offering a guarantee of effective carbon mitigation, while the EU ETS for aviation has been scaled back to cover only intra-EU flights for the foreseeable future.817

Lord Deben believed that carbon trading was not something that could be relied upon and is was a very limited concept in any case.818 He added that:

As we move on, nations will be doing more and more, and they will find it more and more difficult. The idea that there will be a whole lot of spare and quite cheap trading to be done seems unlikely.819

Policy and other technical measures

The DfT now assumes that the carbon emissions from expansion can be reduced below the CCC carbon limits through supply-side policy measures and without reducing demand.820 Lord Deben did not completely agree that such an outcome might be effective and believed that “the more they think demand is going up, the harder they have to work at the technological answers to deliver a means of doing it.”821

The DfT commissioned Ricardo Energy and Environment to assess the cost and abatement potential of a series of policy measures that could be used by the UK to unilaterally reduce UK aviation emissions:822

a)Increased R&D in more efficient engines and aircraft;

b)Early fleet replacement with more fuel-efficient aircraft;

c)Improvements to the ICAO CO2 emissions standard;

d)Reduced aircraft cabin weight;

e)Regulation of aircraft types operating from UK airports;

f)More efficient ground movements; and

g)Increased use of biofuels.

Of these options, it was considered by the DfT that “increasing the uptake of renewable fuels and measures to encourage the use of single-engine taxiing” would have the greatest benefit in mitigating carbon emissions.823 With reference to the table below, it is specifically assumed by the DfT that:

Table 16: Assumed carbon abatement, carbon capped scenario, by measure, UK level, MtCO2824

Several points were raised in oral evidence that appear to question the validity of these assumptions, particularly for biofuels, which are assumed in the DfT’s work to account for the majority of abatement against the carbon requirements. Professor Forster believed that biofuels could not achieve all of the abatement on its own and for it to effective “you have to do a far better job with the regulatory framework around biofuels, to make sure they are sustainable and to be able to get fuels into aircraft far more efficiently than we do currently.”825 Lord Deben said “we have to be a bit careful about the assumption that there will be sustainable biofuels available in sufficient amounts to do some of the things that are suggested.”826 With respect to the introduction of regulation to incentivise the use of more fuel efficient aircraft, Lord Deben said that in practical terms it could be achieved but historically “it has been very difficult to introduce such regulations” and that to have more efficient aeroplanes, the regulation introduced would have to be “pretty tough”.827

Carbon emissions and costs in the economic case

The total additional damage costs from carbon emissions from a NWR scheme were estimated by Jacobs, on behalf of the Airports Commission, at £19.2 billion, including £18.5 billion for air travel (table below). In the Airports Commission’s final Business Case, the damage costs of carbon from air travel are removed and only those costs from passenger surface access, airports operations and construction were included in the economic case and were monetised at a present value of £938 million. The DfT has maintained this methodology, with the updated damage costs of carbon at £818 million over the appraisal period.

Table 17: Additional and total central carbon value, by emissions source, for the Heathrow NWR scenario (NPV)828

It was not clear initially as to why the carbon costs from air travel were not included in the business case of the appraisal. Professor Piers Forster clarified that the exact allocation of these costs in the economic appraisal is dependent upon the damage costs of these carbon dioxide emissions being “completely and effectively ameliorated by effective trading within a carbon trading scheme.”829 Professor Forster believed there were two reasons to seriously question the assumption that no climate related damages would occur from the projected additional increase in air travel:

Firstly, existing carbon trading under the EU emissions trading scheme (EU-ETS) has had a faltering start and the low price of carbon offsets under the scheme indicate it is far from efficient. Secondly, no current or planned trading scheme accounts for the additional climate impact of air travel beyond its emissions of greenhouse gases.830

It was assumed by the DfT that an effective international emissions trading scheme would be operational by 2030 and beyond. The closest thing to such a scheme now is the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), which will begin in 2020 and covers increases in emissions from international aviation. But as explained by Professor Forster:

It is not yet clear if this will take-over from the EU-ETS from international travel with Europe, or exactly how the scheme will operate. However, experience tells us that such internationally negotiated schemes will operate imperfectly, especially in its initial stages.831

As an alternative to the current approach, Professor Forster recommended that some fraction of the carbon-traded damage is retained in the appraisal. He estimated that residual damages of between 20% and 50%832 would result if traded under the current EU-ETS. He acknowledged that as the trading platforms improve the fraction of residual damages would reduce over the 60 years of the appraisal period. Assuming a linear improvement in trading practises towards a perfect trading platform over the 60-year appraisal period, Professor Forster concluded that “these estimates would very approximately lead to between 10% and 25% residual damages—£1.8 to £4.5 Billion using the Jacob estimate of emissions and carbon price.”833

Even then, Professor Forster explained that the particularly harmful nature of emissions from aviation, which can be additional to just those effects from carbon dioxide,834 means that any carbon trading, which only considers greenhouse gas emissions from flying will not be effective at limiting climate damages from non-greenhouse gas aviation emissions. He added that:

If you wanted to account for these in planning, a working estimate could be that the cost estimate for climate damages for flying would be doubled to over £36 billion, and carbon trading would only limit less than half of this.835

He prefaced this by saying that these estimates were “very approximate” but still illustrated why “carbon trading represents a less satisfactory option than tackling the aviation emissions at source through improved technology, air traffic management, low-carbon fuels and demand management.”836

796 Committee on Climate Change, Fifth Carbon Budget, November 2015

797 Gross (absolute or actual) emissions refer to the level of emissions emitted by a country or sector. Net emissions is the level of emissions emitted, minus those emissions offset through international or cross-sectoral emissions trading and other schemes.

798 Airports Commission, Discussion Paper 03: Aviation and Climate Change, April 2013, p 14

800 Airports Commission, Final Report, July 2015, p 66

801 Q215; Q220

802 Department for Transport, Revised Draft Airports National Policy Statement, October 2017, p 30

803 Airports Commission, Final Report, July 2015, p 82

804 Airports Commission, Strategic Fit: Forecasts, July 2015

805 Airports Commission, Final Report, 2015, p 86

806 Airports Commission, Final Report, p 203

807 Department for Transport, Appraisal of Sustainability, Appendix A, A-9 Carbon, p 6

808 Department for Transport, Appraisal of Sustainability, Appendix A, A-9 Carbon, p 14

809 Department for Transport, Appraisal of Sustainability, Appendix A, A-9 Carbon

810 Department for Transport, Appraisal of Sustainability, Appendix A, A-9 Carbon, p 14

811 Department for Transport, Appraisal of Sustainability, Appendix A, A-9 Carbon

812 Airports Commission, Economy: Carbon Policy Sensitivity Test, July 2015

813 Department for Transport, Updated Appraisal Report, October 2017, p 34

815 For more information, see: European Commission, Reducing aviation emissions from aviation, accessed 11 December 2017

816 For more information, see: ICAO, Carbon Offsetting and Reduction Scheme for International Aviation, accessed 14 December 2017

817 Aviation Environment Federation (NPS0031)

818 Q225

819 Q216

820 Department for Transport, Appraisal of Sustainability, Appendix A, A-9 Carbon, p 27

821 Q222

822 Ricardo Energy & Environment, Carbon Abatement in UK Aviation, October 2017

823 Department for Transport, Appraisal of Sustainability, Appendix A, A-9 Carbon, p 28

824 Department for Transport, Appraisal of Sustainability, Appendix A, A-9 Carbon, p 33

825 Q218

826 Q228

827 Q229

828 Jacobs, Carbon: Further Assessment, May 2015, p.29

829 Professor Piers Forster (NPS0088)

830 Professor Piers Forster (NPS0088)

831 Professor Piers Forster (NPS0088)

832 The optimistic 20% is taken from current leakage rates in the EU-ETS assuming other aspects of the scheme genuinely offset carbon. The 50% value is taken from the current low carbon price compared to where it needs to be, which maybe a more realistic indicator of the scheme’s efficiency.

833 Professor Piers Forster (NPS0088)

834 Flying not only emits carbon dioxide, it also emits other gases and particles and leads to the formation of contrails. In particular, contrails add significantly to the warming effect of aviation emissions over and above what can be expected from CO2 alone.

835 Professor Piers Forster (NPS0088)

836 Professor Piers Forster (NPS0088)

Published: 23 March 2018